Every few weeks we are reminded that the economy is not some abstract concept that people like myself like to discuss at the dinner table. No, it is made up of real people. And, it is getting a lot tougher out there for America’s working families.
Today, the Bureau of Labor Statistics reported that the U.S. economy lost 63,000 jobs in February, following a decline of 22,000 jobs in January of this year. These are the first two months of consecutive job declines since June 2003.
Moreover, the job losses are widespread. Manufacturing lost 52,000 jobs—the 20th month in a row with lower employment in this sector and the largest loss since July 2003. Construction added to the losses with another 39,000 fewer jobs, temp agencies lost 27,600 jobs, retail trade reported an additional job loss of 34,100, and financial services came in with 12,000 fewer jobs. The pain of the fallout of the housing and mortgage crisis is palpable across the entire spectrum of jobs and industries.
It is now patently obvious that the woes in the residential construction sector have spilled over into the economy at large. Residential construction employment, both those workers directly employed by construction companies and specialty contractors, fell by 25,600 jobs—the 11th decrease in a row. And construction workers losing their jobs in the residential market cannot hope to be rehired in the commercial construction markets, where employment also fell by 8,800 jobs in February 2008.
The lack of job growth in construction shows the weakness of new home sales, which also means that jobs in mortgage lending are falling. Real estate financial services lost 3,700 jobs in February, contributing to the decline of 12,000 jobs in the financial services industry. These combined weaknesses mean that families have less money to spend, which explains why retail employment fell, too. All retail sectors (except grocery stores) lost jobs.
And with retailers selling less stuff, there is also less of a need to produce things. Consequently, manufacturing decreased on a broad basis. All manufacturing sectors except computer manufacturing lost jobs in February.
The pillars of job growth, such as they are, remain the same. Governments, especially at the state and local level, added 38,000 jobs. Health care added 36,000 more jobs. And restaurant employment increased by 19,900 jobs.
The decline in jobs is just an extension of the ongoing weakness in the labor market that has been noticeable for some time. These latest figures are not an isolated, one-off occurrence, but rather the reflection of a structurally weak economy. For the past 12 months, the economy added on average 71,700 new jobs each month, compared to an average of 145,400 jobs for the prior 12 months, and 225,300 for the 12 months before that. Over the past year, job growth has been less than one-third that of two years earlier.
This is remarkable because the job growth in this business cycle, which started in March 2001, was nothing to write home about. On average, employment growth equaled an annualized monthly rate of 0.6 percent, or less than one-third the historical average before this business cycle. And there were only 11 months in this business cycle when jobs grew above the historical average rate, the last of which was in July 2006.
At the same time that employment has declined, the unemployment rate has stayed flat. This is not really good news since it is the result of people giving up looking for a job. The number of people who are not in the labor force grew by 644,000. Those are people who don’t have a job or who are not looking for one. Generally speaking, it is the case that the number of people who give up looking for work is growing as job growth slows.
There is no way to put a positive face on today’s job figures. The labor market has been in the doldrums for years, with well below average job growth, flat wages, and declining benefits. This has forced families deeper and deeper into record amounts of debt. And just as families are beginning to ponder how they are ever going to repay this debt, the rug is pulled out from under them as jobs become scarcer.
Policymakers who have ignored the trouble signs brewing in the labor market for years need to craft an economic recovery plan that addresses the current nose dive in the labor market, but also the long-term weakness that preceded it. An economic stimulus plan that is currently being implemented is a good first step, but it needs to be followed by a reorientation of our longer-term economic policies to make the economy work for real people with real economic problems—not just financial markets dealing with mostly self-inflicted pain.
Christian E. Weller is a Senior Fellow, Center for American Progress, and Associate Professor, Department of Public Policy and Public Affairs, University of Massachusetts Boston.